[Federal Register Volume 88, Number 229 (Thursday, November 30, 2023)]
[Notices]
[Pages 83571-83573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-26331]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6432-N-01]


Notice of Certain Operating Cost Adjustment Factors for 2024

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, HUD.

ACTION: Notice.

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SUMMARY: This notice establishes operating cost adjustment factors 
(OCAFs) for project-based assistance contracts issued under Section 8 
of the United States Housing Act of 1937 and renewed under the 
Multifamily Assisted Housing Reform and Affordability Act of 1997 
(MAHRA) for eligible multifamily housing projects having an anniversary 
date on or after February 11, 2024. OCAFs are annual factors used to 
adjust Section 8 rents renewed under section 515 or section 524 of 
MAHRA.

DATES: Applicability Date: February 11, 2024.

FOR FURTHER INFORMATION CONTACT: Jennifer Lavorel, Director, Program 
Administration Office, Office of Asset Management and Portfolio 
Oversight, Department of Housing and Urban Development, 451 7th Street 
SW, Washington, DC 20410; telephone number 202-402-2515 (this is not a 
toll-free number). HUD welcomes and is prepared to receive calls from 
individuals who are deaf or hard of hearing, as well as individuals 
with speech or communication disabilities. To learn more about how to 
make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 514(e)(2) and section 524(c)(1) of the Multifamily Assisted 
Housing Reform and Affordability Act of 1997 (MAHRA) (42 U.S.C. 1437f 
note), as amended, require HUD to establish guidelines for the 
development of operating cost adjustment factors (OCAFs) for rent 
adjustments. Similar language is found in sections 524(a)(4)(C)(i), 
524(b)(1)(A), and 524(b)(3)(A) of MAHRA, all of which prescribe the use 
of the OCAF in the calculation of renewal rents. MAHRA gives HUD broad 
discretion in setting OCAFs. For example, sections 524(a)(4)(C)(i), 
524(b)(1)(A), 524(b)(3)(A), and 524(c)(1), simply refer to ``an 
operating cost adjustment factor established by the Secretary.'' HUD 
uses a single methodology for establishing OCAFs. The sole limitation 
to this grant of authority is a specific requirement in each of the 
foregoing provisions that application of an OCAF ``shall not result in 
a negative adjustment.''
    OCAFs vary among states and territories. Contract rents are 
adjusted by applying the OCAF for the state or territory in which the 
subject project is located to that portion of the rent attributable to 
operating expenses exclusive of debt service.
    The OCAFs provided in this notice are applicable to eligible 
projects having a contract anniversary date on or after February 11, 
2024.

II. OCAF Data Sources

    OCAFs are calculated as the sum of weighted component cost changes 
for electricity, employee benefits/employee wages, fuel oil, goods/
supplies/equipment, insurance, natural gas, property taxes, and water/
sewer/trash using publicly available indices. The weights used in the 
OCAF calculations for each of the nine cost component groupings are set 
using current percentages attributable to each of the nine expense 
categories. The nine cost component weights are calculated at the state 
level, which is the lowest level of geographical aggregation with 
enough projects to permit statistical analysis. These data are not 
available for the Western Pacific Islands, so data for Hawaii are used 
as the best available indicator of OCAFs for these areas. HUD 
calculates weights using three years of audited Annual Financial 
Statements from projects covered by OCAFs. The

[[Page 83572]]

expenditure percentages for these nine categories have been found to be 
stable over time, and using three years of data increases their 
stability.
    HUD uses the best current price data sources for the nine cost 
categories in calculating annual change factors. State-level data for 
electricity, fuel oil, and natural gas from Department of Energy 
surveys are relatively current and continue to be used. Data on changes 
in employee benefits/employee wages, goods/supplies/equipment, 
insurance, property taxes, and water/sewer/trash costs are available 
only at the national level.
    The data sources used for the selected nine cost indicators are as 
follows:
    <bullet> Electricity: Energy Information Agency (EIA), May 2023 
``Electric Power Monthly'' report, Table 5.6.B. HUD compares the 
January 2023 to May 2023 estimate with the January 2022 to May 2022 
estimate. https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_06_b.
    <bullet> Employee benefits/employee wages: Bureau of Labor 
Statistics (BLS) ECI, Private Industry Benefits, All Workers (Series ID 
CIU2030000000000I), at the national level and Private Industry Wages 
and Salaries, All Workers (Series ID CIU2020000000000I), at the 
national level. HUD compares the second quarter of 2023 to the second 
quarter of 2022.
    <bullet> Fuel Oil: EIA U.S. Weekly Heating Oil and Propane Prices 
report. Average weekly residential heating oil prices in cents per 
gallon excluding taxes for the period from October 5, 2022, through the 
week of March 29, 2023 are compared to the average from October 5, 
2021, through the week of March 29, 2022. For the States with 
insufficient fuel oil consumption to have separate estimates, the 
relevant regional Petroleum Administration for Defense Districts (PADD) 
change between these two periods is used; if there is no regional PADD 
estimate, the U.S. change between these two periods is used. https://www.eia.gov/dnav/pet/pet_pri_wfr_a_EPD2F_PRS_dpgal_w.htm.
    <bullet> Goods/Supplies/Equipment: Bureau of Labor Statistics (BLS) 
Consumer Price Index, All Items Less Food, Energy and Shelter (Series 
ID CUUR0000SA0L12E) at the national level. HUD compares the July 2023 
estimate to the estimate for July 2022.
    <bullet> Insurance: Bureau of Labor Statistics (BLS) Producer Price 
Index, Industry Data for Direct Property and Casualty Insurers: 
Commercial Multiple Peril Insurance (Series ID PCU5241265241265) at the 
national level. HUD compares the estimate for July 2023 to the estimate 
for July 2022.
    <bullet> Natural Gas: Energy Information Agency, Natural Gas, 
Residential Energy Price, June 2022-May 2023 monthly prices in dollars 
per 1,000 cubic feet at the state level. Due to EIA data quality 
standards, several states were missing data for one or two months in 
2022 and 2023; in these cases, data for these missing months were 
estimated using data from the surrounding months in that year and the 
relationship between that same month and the surrounding months in 
2021. http://www.eia.gov/dnav/ng/ng_pri_sum_a_EPG0_PRS_DMcf_a.htm.
    <bullet> Property Taxes: Census Quarterly Summary of State and 
Local Government Tax Revenue--Table 1: https://www.census.gov/econ/currentdata/dbsearch?program=QTAX&startYear=2019&endYear=2021&categories=QTAXCAT1&dataType=T01&geoLevel=US¬Adjusted=1&submit=GET+DATA&releaseScheduleId=.
 Twelve-month property taxes are computed as the total of four quarters 
of tax receipts for the period from April through March. Total 12-month 
taxes are then divided by the number of occupied housing units to 
arrive at average 12-month tax per housing unit. The number of occupied 
housing units is taken from U.S. Census Bureau's Current Population 
Survey/Housing Vacancy Survey (CPS/HVS) housing inventory estimates, 
Table 8: https://www.census.gov/housing/hvs/data/histtab8.xlsx.
    <bullet> Water/Sewer/Trash: Consumer Price Index, All Urban 
Consumers, Water and Sewer and Trash Collection Services (Series ID 
CUUR00 00SEHG) at the national level. HUD compares the estimate for 
July 2023 to the estimate for July 2022.
    The sum of the nine cost component percentage weights equals 100 
percent of operating costs for purposes of OCAF calculations. To 
calculate the OCAFs, state-level cost component weights developed from 
AFS data are multiplied by the selected inflation factors. For 
instance, if wages in Virginia comprised 50 percent of total operating 
cost expenses and increased by 4 percent from 2022 to 2023, the wage 
increase component of the Virginia OCAF for 2024 would be 2.0 percent 
(50% * 4%). This 2.0 percent would then be added to the increases for 
the other eight expense categories to calculate the 2024 OCAF for 
Virginia. For states where the calculated OCAF is less than zero, the 
OCAF is floored at zero. The OCAFs for 2024 are included as an Appendix 
to this notice.

III. Findings and Certifications Environmental Impact

    This notice sets forth rate determinations and related external 
administrative requirements and procedures that do not constitute a 
development decision affecting the physical condition of specific 
project areas or building sites. Accordingly, under 24 Code of Federal 
Regulations 50.19(c)(6), this notice is categorically excluded from 
environmental review under the National Environmental Policy Act of 
1969 (42 U.S.C. 4321).

IV. Paperwork Reduction Act

    This notice does not impact the information collection requirements 
already submitted to the Office of Management and Budget (OMB) under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). In 
accordance with the Paperwork Reduction Act, an agency may not conduct 
or sponsor, and a person is not required to respond to, a collection of 
information unless the collection displays a currently valid OMB 
control number.

V. Catalog of Federal Domestic Assistance Number

    The Catalog of Federal Domestic Assistance Number for this program 
is 14.195.

Julia R. Gordon,
Assistant Secretary for Housing--FHA Commissioner.

Appendix

                                   Operating Cost Adjustment Factors for 2024
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                                                                                                  Percent change
                                                                       2023            2024           in OCAF
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Alabama.........................................................             5.8             5.1           -12.1
Alaska..........................................................               6             4.9           -18.3
Arizona.........................................................             5.7             4.7           -17.5
Arkansas........................................................             5.9             5.3           -10.2

[[Page 83573]]

 
California......................................................             7.1             5.4           -23.9
Colorado........................................................             5.9             5.2           -11.9
Connecticut.....................................................             6.1             7.1            16.4
Delaware........................................................             5.8             5.3            -8.6
District of Columbia............................................             5.8             5.4            -6.9
Florida.........................................................             6.1             5.2           -14.8
Georgia.........................................................             5.6             4.8           -14.3
Hawaii..........................................................             7.3             5.4           -26.0
Idaho...........................................................             5.1             4.8            -5.9
Illinois........................................................             7.3             5.6           -23.3
Indiana.........................................................             6.4               5           -21.9
Iowa............................................................               5             4.5           -10.0
Kansas..........................................................             5.5             5.1            -7.3
Kentucky........................................................             6.4             4.8           -25.0
Louisiana.......................................................             5.9               5           -15.3
Maine...........................................................             8.3               8            -3.6
Maryland........................................................             6.6             5.4           -18.2
Massachusetts...................................................             6.1             6.6             8.2
Michigan........................................................             5.5             5.2            -5.5
Minnesota.......................................................             7.3             5.3           -27.4
Mississippi.....................................................             6.2             5.3           -14.5
Missouri........................................................             5.2             5.2             0.0
Montana.........................................................             5.4             5.3            -1.9
Nebraska........................................................             5.9             4.9           -16.9
Nevada..........................................................             6.2             5.4           -12.9
New Hampshire...................................................             5.7               7            22.8
New Jersey......................................................             5.3             5.6             5.7
New Mexico......................................................               6             4.9           -18.3
New York........................................................             7.6             5.4           -28.9
North Carolina..................................................             5.7             4.9           -14.0
North Dakota....................................................               6             4.7           -21.7
Ohio............................................................             6.2             5.6            -9.7
Oklahoma........................................................             4.9             5.2             6.1
Oregon..........................................................             5.6             4.9           -12.5
Pacific Islands.................................................             7.3             5.4           -26.0
Pennsylvania....................................................             5.8             6.1             5.2
Puerto Rico.....................................................             6.3               5           -20.6
Rhode Island....................................................             5.3             6.4            20.8
South Carolina..................................................             5.6             4.8           -14.3
South Dakota....................................................             4.8             4.3           -10.4
Tennessee.......................................................             5.7             4.9           -14.0
Texas...........................................................             5.7             5.3            -7.0
Utah............................................................             5.6             4.8           -14.3
Vermont.........................................................               6             5.2           -13.3
Virgin Islands..................................................             5.8             5.7            -1.7
Virginia........................................................               6             5.2           -13.3
Washington......................................................             5.9             4.9           -16.9
West Virginia...................................................             6.6             5.3           -19.7
Wisconsin.......................................................             6.6             5.1           -22.7
Wyoming.........................................................             5.6             4.9           -12.5
United States...................................................             6.1             5.3           -13.1
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[FR Doc. 2023-26331 Filed 11-29-23; 8:45 am]
BILLING CODE 4210-67-P